Business review

EPS & dividends

Earnings per share

Basic earnings per share have increased by 27.3% to 21.0p (2009/10:16.5p). The increase year on year is as a consequence of improved underlying performance, partially offset by the adverse movement in exceptional items in the year. On a more comparable basis, removing the impact of exceptional items and financing fair value remeasurements, adjusted basic earnings per share have increased by 25% to 20.5p (2009/10:16.4p).

  2010/11 2009/10
Basic earnings per share 21.0p 16.5p
Exceptional items 0.3p (0.7)p
Financing fair value remeasurements (net of tax) (0.2)p (0.1)p
Impact of prior year items and exceptional items on income tax (0.6)p 0.7p
Adjusted earnings per share 20.5p 16.4p

Dividends

Given the strong performance in 2010/11 and confidence in the future prospects provided by self-help initiatives, the Board believes it is now appropriate to start lowering dividend cover from 3.0 times to 2.7 times adjusted earnings over the medium term. At this level the Board believes the dividend will continue to be prudently covered by earnings and free cash flow and remain consistent with the capital needs of the business. Accordingly, the Board has proposed a final dividend of 5.145p, an increase of 43.9%. This gives a full year dividend of 7.07p, an increase of 28.5% (2009/10: 5.5p).

As previously announced, the Group’s interim dividend is calculated automatically as 35% of the prior year’s total dividend. Based on this, the interim dividend to be paid in November 2011 would be 2.47p per share (2010: 1.925p per share). The final dividend will continue to be proposed each year as part of the full year preliminary announcement in March.

The final dividend for the year ended 29 January 2011 will be paid on 20 June 2011 to shareholders on the register at close of business on 6 May 2011, subject to approval of shareholders at the Annual General Meeting, to be held on 16 June 2011. A dividend reinvestment plan (DRIP) is available to shareholders who would prefer to invest their dividends in the shares of the Company.

The shares will go ex-dividend on 4 May 2011. For those shareholders electing to receive the DRIP the last date for receipt of electing is 27 May 2011.